Poverty

Record U.S. Poverty Rate Holds As Inequality Grows

A woman walks back to her car with a wagon full of food that was handed out by the Food Bank of the Southern Tier Mobile Food Pantry in Deposit, New York

At least things didn’t get worse. For half a decade, the percent of Americans living below the poverty line has increased each year, from 12.3 percent in 2006 to 15.1 percent in 2010. Today the Census Bureau released its analysis of U.S. poverty in 2011, and the official poverty rate essentially held at 15 percent, meaning that 46.2 million people live below the poverty line.

That’s still the highest level in almost two decades, but it’s good news compared with what some people expected. The Brookings Institution, for example, predicted that the rate would increase to 15.5 percent, or an additional 1.5 million people.

Although poverty levels held, there’s still bad news. Median real household income fell 1.7 percent, to $62,273, and income inequality rose in 2011. The Gini index, a common measure of inequality, rose 1.6 percent from 2010 to 2011. “This represents the first time the Gini index has shown an annual increase since 1993, the earliest year available for comparable measures of income inequality,” the Census said.

The rise in inequality seems to be driven by gains at the upper end of the income spectrum and declines in the middle class. The real income of the highest quintile of earners rose 1.6 percent, and the top 5 percent of earners saw their incomes increase 4.9 percent. At the same time, the middle-income quintiles fell between 1 percent and 1.9 percent each. When you adjust the Gini intex to take into account different types of households for each segment, the lowest quintile basically stayed the same. The rate of the extremely poor—people earning less than half of the official poverty threshold—was constant at 6.6 percent of the population.

The Washington Postpoints out that this poverty report may overcount the poor because it doesn’t take into account some key government supports, such as food stamps and the earned income tax credit. Calculations that include those income sources won’t be out until November—exactly when in November is a mystery, so more data either way could be politically divisive before the election.

For now, these data reiterate a central debate in the presidential election over how to safeguard the middle class. As I noted at the Democratic convention last week, politicians rarely talk about the poor, instead focusing on helping the middle class and preventing families from falling down economically. The folks in the middle, who this new data show are seeing their income shrink, will no doubt be listening.